I tried once to use the MD5 hashing in the format you are using and it
did not work, i.e. {MD5}$1$23r8j92hf23hf23f etc. I was creating the
MD5 hash by changing my root password on a linux box, then looking in
/etc/shadow and copying that hash to my LDAP credentials= lines. It
didn't seem to work.

I ended up making a MD5 password USING OpenLDAP in the sense that I used
my user account to make a password, looked at that hash, then copied
that hash over to the credentials= line in slapd.conf (or rootpw line
for that matter). The formatting was different, something like
{MD5}3ij3ijoir2je2o3== (note there are no '$' characters in it, and
there are always 2 '=' characters at the end).

Using SSL/TLS. Each LDAP server sign it's own CA cert
"su - bmodi" or ldapsearch, all appears to work, whether I put which ldap server in the /etc/ldap.conf and /etc/openldap/ldap.conf file on any of the LDAP server itself.
examples ( only 1 LDAP server is in the ldap.conf file at a time )
server1 is client of server2 or server3 or itself
server2 is client of server1 or server3 or itself
server3 is client of server1 or server2 or itself
client1 or client2 are clients of either of the LDAP servers ( one at a time )
( ldapserach command ran - ldapsearch -D "cn=manager,dc=pro-unlimited,dc=com" -W -x -H ldaps://<server1 or server2 or server3> )

Some config layout info
/etc/openldap/cacerts/cacert.pem have all three LDAP server's certificate in it
/etc/openldap/server/ contains servercrt.pem and serverkey.pem
/etc/openldap/client/ contains clientcrt.pem and clientkey.pem
/etc/ldap.secret contains the passwd of the rootdn user
/root/.ldaprc contains the following ( on master or client )
TLS_CERT /etc/openldap/client/clientcrt.pem
TLS_KEY /etc/openldap/client/clientkey.pem
TLS_REQCERT demand